Annual report 2004 - Emmi UK · 2 Annual report 2004 Dear Business Partner, ... example, we were...

Annual report 2004

Our Annual Report is illustrated with pictures ofSwitzerland and other countries. On Friday 11 March2005, several photographers took pictures of variouspeople and products at eleven different locations.

BaselPhoto: Guido Flück, Los Angeles

About EmmiThe Lucerne-based dairy group Emmi is the leading Swisscompany for cheese and chilled products. The sustainedgrowth over many years based on an equity capital share ofabout 50 per cent is achieved through innovations, gains inmarket share both in Switzerland and abroad as well as acqui-sitions. In the year 2004 Emmi achieved sales of approximate-ly 1.926 Mia. CHF. Emmi employs 2786 people in Switzerland, inEurope and the USA.

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Editorial Fritz Wyss and Walter Huber

Emmi Highlights 2004

The year 2004 at a glance

Emmi Group

Dairy Products

Dairy Products International

Cheese

Cheese International

Other business areas, subsidiaries and associates

Corporate bodies

Group structure

Corporate Governance

Employees

Ecology

Research & Development

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Contents

Friday, 11 March 20051 Montreux7 Maienfeld8 Zurich Airport10 Berne24 Pilatus26 Stans30 Montreux34 London38 Berlin40 Biel-Bienne43 Milan47 Biel-Bienne48 Basel

Annual report 20042

Dear Business Partner,Dear Shareholders,Dear Bondholders,Dear Employees

With the exception of the US and Canada, economic growth inEmmi’s main markets was below expectations in 2004. WithinSwitzerland the trend towards low-cost products accelerated,generating uncertainty among retailers and intensifying com-petition in the fourth quarter in particular.

Thanks to the power of innovation, Emmi succeeded inachieving its strategic objectives of expanding internationalactivities while maintaining its market position in Switzer-land. The Berne-Ostermundigen dairy integration projects, themerger of the companies Gerberkäse AG, Zingg AG and TigerKäse AG to form Emmi Fondue AG, the takeover of the Hirzeldairy and the resulting collaboration with Nestlé all wentsmoothly and according to plan. Emmi expanded its interna-tional position in the German, US and Benelux markets in par-ticular, adding the UK at the beginning of 2005. The partner-ship with the French company Bongrain SA will strengthenour position in the international cheese market.

The Group’s innovative product pipeline was the drivingforce behind our entry into new markets. In particular, theproduct Caffè Latte, which was followed by Choco Latte in2005, and also the popular functional food product Benecol,generated large sales volumes and new momentum both inSwitzerland and the international markets. Thanks to our es-tablished positions in the cheese sector, with cave-agedGruyère and Emmentaler but also the innovation miniCol, forexample, we were able to strengthen our image as THEprovider of Swiss cheese abroad. We registered encouraginggrowth in the classic lines such as Le Gruyère, Tête de Moineand Raclette, and the situation for Emmentaler stabilized inmost markets.

With sales growth of 2.5 % to CHF 1.926 bn and net profit ofCHF 47.3 m, the 2004 financial year was the most successful inEmmi’s history and enabled us to reach our targets despite thedifficult environment.

Probably the main event of the year was our highly suc-cessful IPO on 6 December 2004. Following the successfulplacement of our convertible bond in 2001 and the past year’sIPO, our company is now broadly based with a very solid, long-

term capital underpinning. We are also well-placed to moveforward with the continued expansion of our market positionin Europe and North America. I was delighted by the strongover subscription of our shares, which I see as proof of thehigh regard in which Emmi as a company, its managementand its products are held in Switzerland.

Last year’s developments demonstrated the strength ofour company in both strategic and operational terms. Emmi isnow well-equipped to position itself in various European mar-kets. Partnerships with our milk suppliers and their organiza-tions, in particular, developed encouragingly during the year,and we were able to initiate projects such as the producer or-ganization of our majority shareholder ZMP.

I would like to thank both our customers and businesspartners for the trust they have placed in our company. Myspecial thanks also go to all those employees who contributedso valuably to making 2004 such a successful year.

Fritz WyssChairman of the Board of Directors

Targets reached despite difficult environment

Fritz Wyss, Chairman of the Board of Directors and Walter Huber, CEOof the Emmi Group at KKL in Lucerne Photo: Claude Stahel, Zurich

Editorial 3

Emmi’s aim is to be most innovative premium dairy in Europe.How can it achieve this goal?Size alone was never – and never will be – Emmi’s goal. This iswhy we have positioned ourselves very clearly in the premiumsegment, and concentrated on innovative products. In launchingproducts such as Benecol, Aloe Vera and Caffè Latte, we haveproven that we are the innovation drivers in our industry in Eu-rope. We aim to continue launching innovative concepts on themarket in future and thus keep our customers’ interest. If wemanage to do this, then we will have achieved our goal.

What are the biggest challenges facing Emmi in the inter-national milk-processing market?If, in an open Europe with extensively liberalized markets, we re-main independent, while at the same time generating healthygrowth and good earnings, then we have mastered one of thegreatest challenges. Our aim is to strengthen our leading posi-tion in Switzerland and to generate substantial growth in our keyEuropean markets.

Emmi is considered the industry’s innovation driver. Whatare the success factors behind Emmi's dynamic innovationpipeline?We have an excellently coordinated team that works togetherclosely in the areas of development, marketing, production andquality assurance. Decision-making paths are kept short, withthe aim of ensuring flexibility and agility. Also very important, ofcourse, is to be aware of trends and the needs of our customers,which we subject to systematic analysis, as well as the courageto break new ground and take risks.

How can a Swiss food producer secure long-term success inthe international arena?We can do this by remaining extremely flexible even whilegrowth is increasing, introducing innovative concepts onto themarket quickly and professionally and responding immediatelyto change. What is more, it is vital that we maintain the dynam-ic pace of innovation.

In 2004, Emmi saw a successful IPO which was ten timesoversubscribed. To what do you attribute this success?We were able to communicate our strategy and business modelin a plausible and credible manner. This meant that both in-vestors and the majority of analysts placed their trust in us andinvested in the Emmi share.

Caffè Latte, launched in March of last year, rapidly becamea hit in Switzerland and in various European countries suchas Germany. Why did Caffè Latte in particular turn into aleader product?Caffè Latte is a lifestyle product with a high pleasure value.Whatis more, coffee is once again a «trendy» drink. We read the signsand launched a high-quality product with modern packagingand an attractive marketing mix. Both the retail trade and con-sumers rewarded our efforts, making Caffè Latte an absolutetrend product in Switzerland and Germany within just a fewmonths.

The cheese business – particularly in the case of Emmentaler– was dogged by overcapacities and pressure on prices.How has the situation developed, and how is Emmi position-ing itself in the international cheese market?The situation has stabilized somewhat, and the previously fullstorage facilities are now at normal levels. We consciously re-duced volumes of Emmentaler last year with the aim of tailoringproduction processes to the market to achieve competitiveprices in the future. In the cheese sector too, we will be focussingon concepts with added value – specialities such as cave-agedEmmentaler or Le Gruyère, for example, and innovative forms ofpackaging. Our aim is to make Emmi the provider of Swiss cheeseworldwide.

2004 was your first full year as the CEO of Emmi. What kindof a year was it for you personally?The successful launch of Caffè Latte was an ideal debut for me.With the establishment of subsidiaries in the UK, France andItaly, as well as the acquisition of the trading company in theNetherlands, we laid the foundations for international develop-ment and expansion. For me personally, the IPO in December wasof course the highlight of an extremely exciting year full of chal-lenges.

Going forward, how is Emmi likely to develop in 2005?We operate in an environment shaped by increasing pressure onprices and an ongoing process of structural change. I am confi-dent that we will be able to reach our goals again this year.

«Shaping the future successfully with innovation»Interview with Walter Huber, CEO of the Emmi Group

Annual report 20044

Emmi Highlights 2004Caffè Latte, en route to Europe, IPO

1 January 2004 Walter Huber succeeds Fritz Wyss as CEO. FritzWyss remains Chairman of the Board of Directors of the EmmiGroup.

5 March 2004 Emmi launches the innovation Caffè Latte. Thelifestyle drink made from coffee and milk becomes a hit inSwitzerland and Europe, with around 30 million units beingsold during the course of the year. Caffè Latte is voted theyear’s most successful new product in Switzerland and Ger-many by AC Nielsen and the food industry magazine «Rund-schau für den Lebensmittelhande»l.

30 March 2004 Emmi takes over the Dutch cheese importerand distribution partner Craamer retroactive to 1 January 2004,thus strengthening its presence in the Benelux region.

21 April 2004 At the employee event in Sursee guest speakerChristian Gross, Trainer of FC Basel, speaks of his team’s risefrom Swiss champions to the Champions League in keepingwith the motto of the event «Emmi headed for the ChampionsLeague».

6 July 2004 Central Switzerland Milk Producers (ZMP), majori-ty shareholder of Emmi, agree to the IPO.

20 August 2004 Emmi is one of the four main sponsors of the2004 Swiss Wrestling and Alpine Festival in Lucerne.

30 August 2004 Baumann Käse AG, a subsidiary of the EmmiGroup, takes over the cheese retail business of Gmür AG, thusexpanding its sales territory to the Zurich/eastern Switzerlandregion.

1 January 2004 5 March 2004 21 April 2004 20 August 2004

Highlights 5

2 September 2004 Emmi consolidates activities in Germany atits Essen location and continues to develop the German mar-ket from this base.

16 September 2004 A uniform logo for Emmi: the Emmi brandstands for premium, «Swissness», quality, innovation and dy-namism. Emmi launches a comprehensive branding pro-gramme.

26 September 2004 Emmi attends Intermopro, the interna-tional dairy products fair, with a complete product range anda new, inviting stand design.

17 October 2004 At SIAL, France’s biggest food fair, Emmipresents miniCol, a cheese alternative that lowers cholesterollevels. miniCol is awarded the SIAL d’Or, one of the most fa-mous prizes in the food industry.

16 November 2004 Emmi and Bongrain Europe, the world’sleading cheese specialities company, join forces in a partner-ship within Emmi Fondue AG. The cooperation will focus ondeveloping and marketing ready-to-use fondue mixtures andprocessed cheese specialities.

6 December 2004 The No. 1 goes public with a successful list-ing on the stock exchange. The Emmi share meets with a pos-itive response from both private and institutional investors.

2 September 2004 16 September 2004 17 October 2004 6 December 2004

Annual report 20046 Friday, 11 March 2005Heidiland motorway service station, Maienfeld

Photo: Mischa Scherrer, Zurich

The year 2004 at a glance

Sales by division

Key data

in Mio. CHF 2004 2003 2002 2001 2000Consolidated sales 1’926 1’879 1’389 1’263 1’151Operating profit before interests, taxes and depreciation (EBITDA) 118.7 118.0 80.2 84.2 78.4

as a % of sales 6.2 6.3 5.8 6.7 6.8Operating profit before interests and taxes (EBIT) 48.2 49.5 36.5 44.4 41.4

as a % of sales 2.5 2.6 2.6 3.5 3.6Cashflow after taxes 119.6 111.3 63.4 69.1 67.1

as a % of sales 6.2 5.9 4.6 5.5 5.8Net profit (before interest of third partie shareholders) 49.1 42.7 19.8 29.4 30

as a % of sales 2.5 2.3 1.4 2.3 2.6Total assets 1’158 1’002 924 777 667

Equity capital incl. interest of third parties and convertible loan in % 56.6 46.5 45.8 49.5 42.9Investments in fixed assets (excluding acquisitions) 82.2 49.5 58.1 57.2 42.0Number of employees 2’786 2’521 1’950 1’420 1’328Milk and cream processing (in million kg) 590 560 410 375 361

51 % Dairy Products46.8 % Cheese2.2 % Other

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Emmi Group 9

The Emmi Group can look back on a challenging year, markedby a certain restraint on the part of Swiss consumers whichbecame particularly pronounced in the fourth quarter. Despitethe difficult overall environment and increasing competition,Emmi succeeded in strengthening its leading position in theSwiss milk-processing market while also expanding its foreignbusiness. Relative to the previous year, the Emmi Groupachieved good results overall, posting an operating profit ofCHF 1.926 bn, which corresponds to an increase of 2.5 %. At thesame time, the company achieved an annual Group net profitof CHF 47.3 m or 2.5 % of net sales (2003: 2.2 %). Thanks tochanges in the product mix, gross profit rose by an above-av-erage 6 %. The company remains in extremely good financialhealth, having increased its equity ratio from 39.4 % to 50.4 %.However, due to the 23.7 % rise in advertising expenditure, op-erating costs were 10.2 % higher than the previous year.

Successful IPO a milestoneThe focus last year was on the launch of Caffè Latte, the mostsuccessful new product in the company’s history, and thehighly successful IPO. The shares were listed on the SWX inZurich and placed in an efficient and professional manner. Theissue was ten times oversubscribed, thus exceeding our ex-pectations by far. Since the first day of trading at the begin-

ning of December 2004, the Emmi share has posted an en-couraging performance. The IPO enabled Emmi to generateadditional capital of CHF 100 m (gross), which will be used tofinance further acquisitions, expand international distribu-tion structures and for communication activities. The 2004 fi-nancial year was the first under the operational leadership ofWalter Huber. The clear division between the operational busi-ness and strategic leadership by the Chairman of the Board ofDirectors Fritz Wyss has proven highly effective, with the hand-over at the start of 2004 running smoothly and according toplan.

Foreign business expanded furtherIn international business, Emmi has paved the way for the fur-ther expansion of its international distribution structures byopening subsidiaries in France, Italy and the UK and purchas-ing the Dutch trading company Craamer. At the same time,the activities of the Fresh Products and Cheese divisions in thekey European market of Germany have been centralized in Es-sen. Despite severe pressure on prices, German sales in theFresh Products Division have doubled, thanks, above all, to thepositive launch of Caffè Latte and the significant increase insales of Benecol, the popular product that helps reduce cho-lesterol. The UK market also performed well, with lifestyleproducts such as Caffè Latte and Choco Latte in particular sell-ing excellently via major sales channels such as Tesco andWaitrose. The strategic partnership announced in November

Friday, 11 March 2005Zurich Airport, Airside CenterPhoto: Andreas Messerli, Birmensdorf

A challenging year for the Emmi Group

The Emmi Group achieved good results in the 2004 finan-cial year, increasing operating profit by 2.5 % to CHF1.926 bn and raising Group net profit to 2.5 %. The focus lastyear was on the successful IPO and the internationallaunch of the lifestyle drink Caffè Latte.

Annual report 200410

with Bongrain, the world’s leading cheese company, repre-sents a solid basis for further joint development of processed-cheese products and synergies in international distribution.Last year, the Emmi Group grew at a faster rate abroad than itdid in its home market of Switzerland, with an increase of for-eign sales by 7.4 % to CHF 446.7 m.

Competitiveness underpinned by innovationIn its product offering, Emmi has systematically implementedthe company’s innovation strategy in international business.Caffè Latte was launched simultaneously in several European

markets, and proved to be the most successful new product inthe company’s history, with around 30 million units sold fromMarch to December of last year alone. With the launch of thecheese alternative miniCol, a product aimed at helping to re-duce cholesterol, Emmi has entered a segment with great po-tential. The product has already been launched in the US, theNetherlands and the UK. With the presentation in Portugal ofEvolus – a product designed to reduce blood pressure levels –Emmi has once again demonstrated its innovative power.

With a view to securing continued competitiveness in thefuture, Emmi initiated a comprehensive investment pro-

Griess-Töpfli (semolina pudding). The special secret Emmi recipeensures the pudding has a unique creamy taste. A delicious dessertor snack.

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onFriday, 11 March 2005Railway Station, BernePhoto: Hansjörg Sahli, Solothurn

Emmi Group 11

gramme last year. The extension of the Emmen cheese centreis due to be completed in 2005, and the production of freshgoods expanded further. Following on from the excellent suc-cess of Caffè Latte, production capacities in Ostermundigenwill be increased successively. The transfer of production fromHirzel to other locations went according to plan last year, andis scheduled for completion this year. The organizationalmerger of the Dairy and Fresh Products divisions enabled thecapacity management of the individual production facilitiesto be optimized further and generated efficiency-enhancingsynergies.

Strengthening our position this yearIn the first quarter of 2005, Emmi introduced Choco Latte inSwitzerland and key foreign markets, and hopes that thishighly promising innovation will follow on from the success ofCaffè Latte. With the acquisition of the organic Biedermanndairy communicated in March, Emmi also strengthened itsexpertise in the organic sector and its position in easternSwitzerland.

Abroad, Emmi intends to continue with its premium strat-egy, examine the opportunities in the market and strengthenits positions in the German, British, Italian, Dutch and Frenchmarkets. In Switzerland, increasing price pressure looks set tocontinue with corresponding effects on the retail trade as awhole and its suppliers. Three months into the year, the EmmiGroup is on track and confident that its innovative productsand continued expansion in Switzerland – and particularlyabroad – will enable it to achieve its growth targets.

Highlights of 2004• Positive performance in difficult environment• Sales and Group profit increased• Foreign business expanded further• Successful IPO a milestone

Outlook for 2005• Further innovative launches on the market• Take internationalization forward• Strengthen competitiveness further

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Emmi Group salesin Mio. CHF

Dairy Products 13

Pleasing performance by the Dairy Products Divi-sion. The Dairy and Fresh Products divisions weremerged to form the Dairy Products Division last year.Especially Fresh Products performed very well, aidedin particular by the launch of innovative productssuch as Caffè Latte as well as the expansion of for-eign operations.


Last year, the Swiss fresh products market was characterizedby increasing competition and intensified pressure on prices.With foreign discounters entering the market, the entire retailindustry is unsure as to how prices will develop. Against thisbackdrop, market participants are now bracing themselves tocope with the upcoming changes. Emmi has identified certaintrends at an early stage, and is taking action in response tothese developments. The organizational merger of the Dairyand Fresh Products divisions to form the Dairy Products divi-sion yielded initial synergies and improvements in the man-agement of production capacities before last year was out. Byconsistently pushing forward our innovation strategy and ex-panding our international business in a targeted approach,Emmi succeeded in increasing the total sales of the newly cre-ated division by 4.9 % to CHF 971 m in a generally stagnatingmarket. In the fresh products segment, the company focussedprimarily on the launch of new lifestyle products and thosewith added health benefits.

Products with added value continue their advanceThe launch of the Caffè Latte drink in March of last year can beseen as the most memorable milestone in Emmi’s history ofnew product introductions. The lifestyle drink, available in anEspresso, Cappuccino and Latte Macchiato version and madeof freshly roasted coffee and milk, earned itself a permanentplace on supermarket shelves within a matter of just a fewmonths. Following the encouraging performance of Caffè Lat-te both in Switzerland and in key European markets, invest-ments in production facilities in Ostermundigen and in com-munication activities were made. In Germany, Caffè Latte was

nominated the most successful new product on the market,with Caffè Latte Macchiato and Cappuccino occupying firstand third place among 1260 newly introduced, non-alcoholicdrinks in 2004. In Switzerland, the product was awarded thecoveted Marketing Trophy in the spring of 2005. In addition toCaffè Latte, the Aloe Vera products also did very well last year,and Emmi succeeded in building on its leading position in thissegment in Europe. Benecol, a yoghurt drink aimed at reduc-ing cholesterol, which was launched in 2003, saw another suc-cessful year. With the continued development of the productas Benecol butter, Emmi has created a supplementary andhighly promising line extension.

Launch of Création Yogourt as Premium ProductIn the fiercely contested yoghurt business, Emmi has intro-duced another innovative quality product into the marketwith the premium line Création Yogourt. Last year, the ice-cream segment failed to match the sales of the record-break-ing hot summer of 2003, despite managing to increase itsmarket share slightly. Thanks to a number of innovations, theconventional dairy products segment put in a satisfactory per-formance in a market that contracted slightly overall duringthe year. Last year saw the introduction of customer-friendlyconcepts such as a new speciality cream line and an enhancedpackaging design (Tetra Pak with screw-top). The lactose-freemilk launched by Emmi, at the beginning of last year, is alsowell-positioned.

Caffè Latte scores as most successful new productlaunch, along with various other innovations

Benecol. Those aiming to reduce their slightly elevated cholesterollevels in a pleasurable and natural way can enjoy Benecol yoghurtdrink, margarine or yoghurt once a day.

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Highlights of 2004• Most successful product launch with Caffè Latte• Increase in total sales in Switzerland and abroad• Investments in the future

Outlook for 2005• International launch of Choco Latte• Acquisition of Biedermann dairy• Expansion of international business

Sales chilled productsin CHF million

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Dairy Products 15

This year Emmi launched Choco Latte – the first Swisschocolate drink and a further promising addition to thelifestyle range – in Switzerland and various key European mar-kets. Further projects for this year include the presentation ofa new pasteurized line produced with advanced technology.

With the acquisition of the organic Biedermann dairy inMarch 2005, Emmi also strengthened its expertise in the or-ganic sector and its position in eastern Switzerland. Followingthe further expansion of production facilities in Ostermundi-gen and Emmen, the relocation of production in Hirzel to oth-er locations and the closure of the dairy in Basel, Emmi is nowin an ideal position to optimize its production capacity man-agement with a corresponding improvement in efficiency.

2003 2004

444.2 474.6+ 6.9 %

390.4 382.9

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Sales dairy productsin CHF million

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Foreign Domestic

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Dairy Products International 17

Intensified international competition has led – particularly inGermany – to increased price pressure all along the valuechain in the food industry. The «Geiz ist geil» («Stingy rules!»)campaigns have negatively impacted prices and hence mar-gins, largely for low-cost providers. In international business,Emmi has clearly positioned itself as a producer of premium-segment branded goods and succeeded in resisting the down-ward pressure on prices, thanks to its focussed distributionstrategy. The fact that German retailers in the fresh productssegment are putting the emphasis on innovative concepts hasbeen confirmed even in an environment of aggressive pricingpolicies. Since last year, Emmi has been strengthening activi-ties in international business with the aim of raising its for-eign sales figure by around 10 percent a year and increasingthe foreign share of overall sales. In Germany, the company’smost important export market, Emmi has made significantprogress. Following the centralization of all sales and market-ing activities in Essen, it has also strengthened its position inthis key European market.

Most innovative dairy company in the premium segmentThe launch of Caffè Latte in particular via all major sales chan-nels has led to a significant increase in sales as well as wide-spread media presence. In Germany, the Macchiato and Cap-puccino versions of Caffè Latte were awarded first and thirdplace respectively out of a total of 1260 new products in thenon-alcoholic segment. In addition, Emmi also presented itselfclearly as the leading premium-segment dairy at the renownedIntermopro trade fair last year.

Despite increasing competition, the lifestyle product AloeVera succeeded in maintaining its position in the market –Emmi’s Aloe Vera is the most successful product in this seg-ment. Benecol – the daily dose of health with its positive influ-ence on cholesterol levels – has also developed encouraginglyin the international food arena. Sales on the German markethave doubled, and in addition to expanding activities in Ger-many, Emmi also established a foothold in the UK last year. Bysetting up its own subsidiary there, the firm has prepared theground to push forward the distribution of products such asCaffè Latte and Aloe Vera in the British market, and is now sup-plying major sales channels such as Tesco and Waitrose. InFrance, Emmi made a good start to the year with its first-timepresence at the food trade fair SIAL, while in Portugal, Emmihas been awarded an «Oscar» for the most innovative fresh-products company.

With the international launch of Choco Latte, Emmi hasdemonstrated its inventive flair again this year. In the UK inparticular, the first Swiss chocolate drink has met with a high-ly promising response. With the addition of ice-cream to theCaffè Latte range, Emmi has also created a basis for the suc-cessful continuation of the line. In key European markets,Emmi aims to continue expanding by means of new distribu-tion companies and collaboration with selected strategic part-ners.

Increase in sales and continued expansionof international markets

Caffè Latte. The innovative lifestyle drink made from freshly roastedtop-quality coffee and milk was the new product of the year in 2004,proving equally popular both within Switzerland and in Europe.

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Cheese 19

Cheese: position expanded with clear focus on pre-mium products. In an increasingly liberalized marketthe cheese business maintained its position well.Last year, the Swiss cheese market was marked byintensifying competition and ongoing structuralchange. The situation for Emmentaler eased slightlyand, with its clear positioning in the premium seg-ment, Emmi was able to cater to the increased de-mand for speciality products in the internationalcheese business.


Last year, the Swiss cheese market was marked by intensifyingcompetition and ongoing structural change. Despite the ex-tensive opening of the domestic market, cheese imports fellslightly last year, while cheese consumption in Switzerlandstagnated. Increasing pressure on retail prices has led to anexpansion in the low-price product ranges. Rising demand forspeciality products, combined with a simultaneous upsurge inbudget lines, reflects current purchasing behaviour in thefood and consumer goods industry. In this environment, andagainst the backdrop of increasing liberalization, the cheesebusiness has performed well within the market. In the contextof overall market developments, Emmi succeeded in furtherstrengthening its position as the leading provider and partnerof choice in the cheese business. With sales of CHF 889.5 m,the company managed to maintain the previous year’s level.

Situation for Emmentaler eases slightlyEmmi succeeded in defusing pressure on the Emmentalerproduct last year and stabilizing the market situation. It wasthus possible to reduce inventories and hence overcapacities,resulting in conscious volume control at a lower level. Thesignificant drop in prices in the first half of the year was onlypartially offset. Positive developments and an increase on theprevious year were seen by the successful product Le Gruyère,as well as Luzerner Rahmkäse, which was supported by a mar-keting offensive and has established itself in German-speak-

ing Switzerland in particular. With its clear positioning in thepremium segment, Emmi has responded to increased demandfor speciality products. Production of cave-aged Emmentalerand Le Gruyère from the Kaltbach cave has increased further,as has their contribution to overall sales. Both within Switzer-land and abroad, these high-quality products have consider-able potential. Newly launched lines have been extremely wellreceived. Developments following the introduction of organicEngadine mountain cheese and other organic products havealso been encouraging.

In the future, to ensure sustainable developments orient-ed towards success, the cheese division will focus more sys-tematically on a differentiation strategy – fore example, in theareas of packaging and distribution. Work on the extension ofthe cheese centre in Kirchberg, near Berne, which was startedlast year, should be completed on schedule in mid-2005. Pro-viding Emmi with a basis for the continued optimization ofproduction space and logistics.

Clear positioning as No. 1in the Swiss cheese market

Die Höhlengereiften (cave-aged cheeses). Stored and matured accordingto age-old traditions, cave-aged cheese develops a characteristic tastein the unique climate of the Kaltbach cave – the intense maturity of cave-aged cheese.In

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Highlights of 2004• Leading position maintained last year• Cave-aged cheese continues to advance• Innovative retail concepts

Outlook for 2005• Focus on differentiation strategy• Expansion in key international markets• Completion of extension to Kirchberg facility

Sales cheese/fondue/processed cheesein CHF million

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Cheese 21

The data presented are based on net sales. Last year,the basis used was gross sales. The prior-year figures havebeen restated accordingly.

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Foreign Domestic

Cheese International 23

Against a backdrop of increasing pressure on costs, the Swisscheese industry succeeded in slightly increasing foreign saleslast year. While price wars in the main European markets – ex-cluding the UK – intensified last year, exports to major non-European markets such as the US, Canada and Japan sawsome significant increases. Despite a decline in the contribu-tion from exports, Emmi managed to position itself clearly asthe world’s leading provider of Swiss cheese. The range ofproducts for export, which has been focussed increasingly onthe Emmi brand over the last year, has started to bear fruit.With its acquisition of the trading company Craamer in theNetherlands, Emmi has created an optimal platform forstrengthening its presence in Benelux. Amalgamating activi-ties in the US market to form the independent subsidiaryEmmi USA was an important step in the continued expansionof the North American key markets. Thanks to a clear commit-ment to the quality segment and a customer-driven offering,Emmi succeeded in making significant progress in the fiercelycontended German market. The collaboration announced inNovember with Bongrain, the world’s No. 1 in the soft cheesemarket, forms a highly promising basis for the developmentand marketing of processed cheese products. Even in the diffi-cult Italian market, signs of a positive turnaround have beenobserved. In future, Emmi also aims to concentrate more onthe quality segment and less on high-volume business in thiskey market.

Future potential for miniCol In its product offering, Emmi has systematically implementedthe company’s innovation strategy in international business.With the launch of the cheese alternative MiniCol, a productdeveloped in collaboration with UK partner Angel Technologyand aimed at helping to reduce cholesterol, Emmi has enteredinto a segment with great potential.

For Emmi, the shift from the traditional cheese counter toself-service shelves signifies a further challenge on a globalscale. With innovative packaging concepts and a clear orien-tation as a provider of branded goods, Switzerland’s No. 1 isfocussing systematically on a differentiation strategy in theinternational cheese business. Both within Switzerland andabroad, sales of cave-aged Emmentaler and Le Gruyère increa-sed again last year, with Le Gruyère aged in the Kaltbach caveseeing a particularly substantial increase on the previous year.

Expansion in international key marketsIn international business, Emmi has set itself the target offurther growing its export sales volumes, of continuallyimproving competitiveness and of expanding its position inmajor markets such as the US, Japan and Germany.

Clear differentiation strategy in the international cheese market

miniCol. Looks like cheese, tastes like cheese and even has a positiveinfluence on cholesterol levels. miniCol is THE alternative to cheese.

Inno

vati

on

Emmi Group 25Friday, 11 March 2005Hotel Pilatus KulmPhoto: Hannes Kirchhof, Oberentfelden

Business area industrySubstantial growth and expansion of foreign businessThe Emmi Group saw an encouraging 10 % growth in its indus-try business last year, with a substantial increase in powdersupplies to the chocolate industry. The Bilateral Agreements IIare improving the competitiveness of the Swiss food industry,as many food items can now be imported into the EuropeanUnion duty-free. From this perspective, export growth can beexpected for 2005 and in subsequent years.

Last year, Emmi launched a large number of special client-specific products with the aim of optimizing the value crea-tion process together with its clients. In the area of cheeseprocessing, successful new projects were launched using newproduction technologies.

The Swiss government’s new agricultural policy is makingthe milk industry more competitive in comparison with theEU, and Emmi is therefore constantly on the lookout for oppor-tunities to also build solid foreign business operations in theindustrial segment. The focus is on export business with Swissspecialities to the European Union.

Emmi Interfrais SARecord sales and above-average results in the catering tradeEmmi Interfrais posted record sales in 2004, increasing itsmarket share in a retail environment that grew only slightlyand a catering trade that contracted. The growth was madepossible via an increase in deliveries to residential homes, hos-pitals and petrol stations, the acquisition of new regionalclients and the launch of a fresh fondue line. In addition, thesuccessful establishment and expansion of the Lausanne plat-form also made a valuable contribution to growth.

In the retail business area, sales performed excellently.Above-average growth in catering supplies was made possibleby restaurant chains. The aim for 2005 is to gain additionalmarket share by continuing to increase supplies to petrol sta-tions, residential homes/hospitals and the retail trade, acquir-ing new clients in the catering trade and launching new prod-ucts such as Choco Latte.

Emmi Fondue AGAmalgamation of production facilities and cooperation with BongrainWith the merger of Gerberkäse AG, Tiger Käse AG and ZinggAG to form Emmi Fondue AG, the focus in 2004, the company'sfirst financial year, was on amalgamating the three produc-tion facilities. Production was shifted to the two locationsThun and Langnau i. E. and the Liebefeld site was closed. TheThun and Langnau i. E. sites were certified in accordance withISO 9001, 14001 and IFS. The increasing pressure on retail pricesintensified further last year.

Sales of processed and fresh cheeses were maintained attheir prior-year levels, with Gerber Fondue Moitié-Moitié200 g for the microwave and Bio Fondue being launched. In ex-port, sales of processed cheese increased, and various newslices were produced especially for the foreign market. Exportsof fondue stagnated. In November, a strategic partnership wasagreed with Bongrain, the world's leading cheese specialitiescompany. The aim of this collaboration is to develop and tomarket ready-to-use fondue mixtures and processed-cheesespecialities on an international basis. Bongrain has taken aminority stake in Emmi Fondue AG.

A complete overview of Emmi’s investments in subsidiaries and associatescan be found in the Financial Report.

Other business areas, subsidiaries and associates

Corporate bodies 27Friday, 11 March 2005Yes Music, StansPhoto: Andreas Messerli, Birmensdorf

The period of office of Members of the Board of Directors isthree years. The next ordinary re-election is scheduled for the2006 General Meeting. Emmi AG was founded in 1993.

Fritz Wyss, Chairman of the Board of DirectorsSince 2003From 1993 –2003 Delegate of the Board of DirectorsFrom 1993 –2003 CEO of Emmi

Werner Muff, Vice Chairman of the Board of DirectorsSince 1999Since 1993 Member of the Board of DirectorsMember of the Board, Central Switzerland Milk Producers

Stephan BaerMember since 2000Chairman of the Board of Directors, Baer AG

Moritz ErniMember since 2003Chairman, Central Switzerland Milk Producers

Martin FurrerMember since 2000Member of the Board, Central Switzerland Milk Producers

Hans HerzogMember since 2002Member of the Board, Central Switzerland Milk Producers

Josef MeierMember since 1993Member of the Board, Central Switzerland Milk Producers

Hanspeter MüllerMember since 2000Member of the Management, North-Western SwitzerlandMilk Association

Josef SchmidliMember since 2003Chairman, North-Western Switzerland Milk Association

Corporate bodies of Emmi AG

Board of Directors

The committees are comprised of members of the Board ofDirectors. They analyse specific areas and report to the Boardof Directors as a preparation for its decisions and the execu-tion of its supervisory function. This is also the function of theadvisory councils. Here the Board of Directors is also assistedby external specialists.

ControllingFritz Wyss (Chairman)Hans HerzogHanspeter Müller

Committee for Personnel MattersFritz Wyss (Chairman)Stephan BaerMartin Furrer

Cheese CouncilFritz Wyss (Chairman)Stephan BaerSamuel Lüthi, Director, Switzerland Milk Producers

Agricultural CouncilFritz Wyss (Chairman)Moritz ErniJosef SchmidliBenedikt Felder, Managing Director, Central Switzerland Milk ProducersJacques Gygax, Managing Director, North-WesternSwitzerland Milk Association

Committees and councils of the Board of Directors


(from left to right) Max Peter, Retail & Supply Chain Management; Max Paul Lüdi, CFO; Herbert Dätwyler, Sales Switzerland*; Matthias Kunz, Cheese DivisionInternational; Walter Huber, CEO; Markus Willimann, Industrial Business & Development & Agricultural Policy; Robert Muri, Dairy Products Division; JosefFellmann, Finance & Accounting*; Rolf Stocker, Human Resources*; Alfons Knüsel, Procurement & Logistics*; Erich Kienle, Dairy Products International Division;Othmar Dubach, Cheese Division Photo: Claude Stahel, Zurich* Members of the enlarged Group Management

Walter Huber, CEOChairman of the Group Management since 2004,with Emmi since 2000

Max Paul Lüdi, CFODeputy Chairman of the Group Management since 1993,with Emmi since 1993

Othmar Dubach, Cheese DivisionMember of the Group Management since 1993,with Emmi since 1983

Erich Kienle, International Fresh Products DivisionMember of the Group Management since 2005,with Emmi since 1987

Matthias Kunz, International Cheese DivisionMember of the Group Management since 2002,with Emmi since 2002

Robert Muri, Dairy Products DivisionMember of the Group Management since 1996,with Emmi since 1980

Max Peter, Retail & Supply Chain ManagementMember of the Group Management since 2002,with Emmi since 2002

Markus Willimann, IndustryMember of the Group Management since 1998,with Emmi since 1998

Group Management

Group structure 29

The Emmi Group consists of individual companies, organ-ized in a holding structure, representing the Dairy Products,Cheese, International and Industry divisions. The holding com-pany is Emmi AG. The Group functions perform strategic du-ties relating to Group policy, and support business processesat Group level.

Group structure

Dairy Products Division

Robert Muri

Finance/Controlling & Human Resources

Max Paul Lüdi

Dairy Products International Division

Erich Kienle

Industry Division

Markus Willimann

Sales Switzerland

Herbert Dätwyler

Retail & Supply Chain Management

Max Peter

Chief Executive Officer

Walter Huber

Cheese Division

Othmar Dubach

Cheese International Division

Matthias Kunz

Finance & Accounting

Josef Fellmann

Human Resources

Rolf Stocker

Procurement & Distribution Logistics

Alfons Knüsel

Corporate Governance 31

1. General information about Emmi AGFoundation, name, registered office, main administrativeoffice, duration, purpose, financial year, date of entry in thecommercial registerEmmi AG (holding company) was founded on 11 June 1997 andentered into the commercial register of the Canton of Lucerneunder number CH-100.3.020.084-8. Emmi AG is a stock corpo-ration under Swiss law and has its registered office and mainadministrative office at Habsburgerstrasse 12 in Lucerne. Theduration of the company is unlimited and the financial yearends on the 31 December each year. According to Article 2 ofEmmi AG’s Articles of Association, the company’s purpose isthe purchase and the ongoing management of participationsin companies of all types, in particular in the dairy-productssector, and the financing of related companies both at homeand abroad. The company may set up branches and sub-sidiaries and may purchase, hold, encumber and sell real es-tate both in Switzerland and in other countries. The companymay enter into all types of business, make commitments andconclude agreements appropriate to the pursuit of the com-pany’s business purpose and beneficial to the company’sdevelopment, or which may be connected either directly orindirectly with the same. The extract from the commercialregister of Emmi AG also contains the following entries in re-lation to contributions in kind, acquisition of assets, specialbenefits, participation certificates:• According to the agreement on contributions in kind and ac-quisition of assets dated 9 June 1997, the company acquiredfrom the Zentralschweizerischer Milchverband (MVL) inLucerne 5’000 registered shares at CHF 1’000 of Emmi SchweizAG, in Lucerne; 4’000 registered shares at CHF 1’000.– of EmmiFrischprodukte AG, in Lucerne; 4’000 registered shares at CHF1’000.– of Emmi Käse AG in Lucerne; 4’000 registered shares atCHF 1’000 of Emmi Milch AG, in Lucerne, 200 registered sharesat CHF 5’000.– of Butterzentrale Luzern, in Lucerne; 200 regis-

tered shares at CHF 1’000.– of the Molkerei Galliker AG, inLucerne; 500 registered shares at CHF 1’000.– of Muther & Co.AG, in Schüpfheim; 5’000 registered shares at CHF 1’000.– ofEmmi International AG, in Lucerne; 150 registered shares atCHF 1’000.– of Emmi Käserei Sarnen AG, in Sarnen; 5’000 reg-istered shares at CHF 100.– of Frischpool AG, in Emmen; 750registered shares at CHF 500.– of the holding company of theSwiss Milk Producers (SMP) in Zollikofen; 50 registered sharesat CHF 5’000.– of Kühlhaus Sternmatt AG, in Kriens; 15 partici-pation certificates at CHF 1’000.– of Milpa Lucerne, in Lucerne;1 capital contribution of CHF 10’000.– of Sbrinz-fino GmbH, inSursee, all with a total value and at a total price of CHF25’109’356.–. In return, the contributor in kind and the compa-ny surrendering its assets received 24’998 registered shares atCHF 1’000.– and a claim against the company in the amount ofCHF 109’356.–; Franz Jung, from and in Eschenbach LU andFritz Wyss, from Landiswil, in Beinwil am See, 1 registeredshare each at CHF 1’000.–.• According to the agreement on contributions in kind dated4 December 2000, the company will acquire, out of the capitalincrease of the Zentralschweizerischer Milchkäuferverband(ZMKV), in Lucerne, 200 registered shares at CHF 5’000.– ofEmmi Butterzentrale AG, in Lucerne, with a total value and ata total price of CHF 2’500’000.–, and to this purpose 2’500 reg-istered shares at CHF 1’000.– are to be issued.

Group companies and associatesSubsidiaries and other participationsEmmi AG is the parent company of the Emmi Group. A list ofthe consolidated subsidiaries and the other participations asat 31 December 2004 can be found in the Financial Report.

Corporate Governance

Friday, 11 March 2005Lakeside promenade, MontreuxPhoto: Stefan Jermann, Zurich

The Emmi Group is committed to modern corporategovernance principles and aims to provide all stakeholderswith the greatest transparency possible, but especially our present and future investors.The following data are in line with the corporate gover-nance guidelines of the SWX Swiss Exchange. Unlessotherwise noted, all data relate to the balance sheet date31 December 2004.


MergersThe following companies have been merged: Chalet Käse AG /Gerberkäse AG / Tiger Käse AG / Zingg AG / Roethlisberger+Sohn AG directly or indirectly into Emmi Fondue AG, FromcoAffinage SA into Fromco SA and Käsespezialitäten AG Utzens-torf into Emmi Käse AG Kirchberg. The US subsidiaries of theEmmi Group have been partly amalgamated through mergers(group-internal restructuring; the former Emmi USA Inc. andH. J. Gasser Co., Inc. were merged into Emmi Gerber Cheese Co.,Inc. and then Emmi Gerber Cheese was renamed Emmi (USA)Inc. Zingg & Co., Inc., New Jersey, was merged into Zingg NewYork, Inc. and Zingg New York, Inc. was then renamed Zingg &Co., Inc., Valley Cottage).

Acquisition of companies/increases in participationsOne new acquisition was Craamer & Co. B.V. The Emmi Groupalso increased its holdings in Fromco SA Moudon (now60.04 %) and in FDS Fromagerie de Saignelégier SA (now85.71 %).

Foundation of companiesEmmi France SAS and Emmi UK Ltd are two newly formedcompanies.

Sale of participationsThe participation in Traber Käse AG was sold.

Newly consolidated companies in the Emmi GroupSwissexport AG has been included in the scope of consolida-tion of the Emmi Group.HOLDING SMP was consolidated as per 31 December 2004.

Minority shareholders in group companiesIt is the Emmi Group’s policy to permit business partners toparticipate in individual Group companies as minority share-holders and to grant them certain minority rights, such asrepresentation on the Board of Directors, provided this is ap-propriate and desirable from Emmi’s point of view.

2. Board of Directors and Group Management2.1 Board of DirectorsDutiesThe duties of the Board of Directors of a Swiss stock corpora-tion are primarily governed by the Swiss Code of Obligations.The Board of Directors of a Swiss company is responsible forthe business strategy and overall direction of the company. Itdetermines the strategic, organizational and budgetary prin-ciples and the accounting guidelines to which the companymust adhere. Notwithstanding its inalienable and non-trans-

Friday, 11 March 2005MilanPhoto: Goran Potkonjak, Zurich


As of 31 March 2005, all of the non-executive members ofthe Board of Directors and affiliated persons held a total of40’740 shares in the company and convertible bonds with apar value of CHF 190’000.–.

2.4 Business transacted by and loans extended to officersand directors of the companyThe members of the Board of Directors and the members ofGroup Management are/were not involved in any businessnot normally deemed to be within the scope of the companyor in any other business transactions that are unusual but im-portant for the company during the current or the previousfinancial year.

As of 31 December 2004, the Emmi Group had not grantedloans to nor acted as guarantors for any members of the Boardof Directors nor to/for any members of Group Managementnor to/for any persons affiliated to the same.

2.5 Employee stock ownership and management incentiveprogrammeThe Emmi Group currently has no stock ownership pro-grammes for employees or management. There are also noconcrete plans at the moment to introduce such programmes.

ferable duties, the Board of Directors can delegate manage-ment tasks in whole or in part to individual members of theBoard of Directors or to third parties. The Board of Directorsappoints the members of Executive Management and theauthorized signatories of the company and supervises themanagement of the company. Apart from this, it prepares theGeneral Meetings and implements the decisions of the same.The members’ term of office is three years. The next ordinaryre-election will take place at the 2006 General Meeting. Theoriginal Emmi AG (now called Emmi Schweiz AG) was foundedin 1993. The data prior to 1997 relate to the original Emmi AG(now called Emmi Schweiz AG). With the exception of FritzWyss, no member of the Board of Directors sits on the Board ofanother listed company.

2.2 Compensation of the members of the Board of Directorsand Group Management, ownership interests of the corpo-rate bodiesTotal compensation (excluding pension fund and social insur-ance contributions) paid out to non-executive members of theBoard of Directors and to members of Group Management(incl. the CEO in 2004) amounts to CHF 602’000.– (Highestamount CHF 356’000.–) respectively CHF 2’938’000.–.

2.3 Share ownershipAs of 31 March 2005, all of the members of Group Manage-ment and affiliated persons held a total of 735 shares in thecompany and convertible bonds with a par value of CHF 60’000.–.

Name Adress Location Number of % of votingregistered shares rights

Zentralschweizer Milchproduzenten (ZMP) Luzern Friedentalstrasse 43 6002 Luzern 2’500’000 58.1

Zentralschweizer Milchkäuferverband Pilatusstrasse 12 6003 Luzern 250’000 5.8

MIBA Milchverband der Nordwestschweiz Zeughausplatz 4410 Liestal 190’000 4.4

Familie Baer Luzern / 6403 Küssnacht am Rigi 65’000 1.4

Emmi Wohlfahrtsfonds Habsburgerstrasse 12 6002 Luzern 80’400 1.9

Société des Produits Nestlé SA Entre-Deux-Villes 1800 Vevey 153’000 3.6

Various 1’064’600 24.7

Total 4’303’000 100

3. Current shareholders and shareholders selling their holdingsCurrent shareholders as per 31 December 2004


4. Transactions with shareholders and other affiliated partiesThe Emmi Group grew out of the activities of the Zentral-schweizer Milchproduzenten ZMP (central Swiss Milk Produc-ers). Since the ZMP is a cooperative federation comprisingseveral cooperative societies, in which the milk producers areorganized, there is a clear connection between the EmmiGroup and its suppliers. This means that there will continue tobe a conflict of interest between company profits and theprice of milk. This also means that, even if the Emmi Groupwere to see continued strong expansion, a sense of responsi-bility towards the producers (farmers, cheesemakers) wouldstill go hand in hand with a pure entrepreneurial or sharehold-er mentality. Given that the ZMP is a majority shareholder, italso has an opportunity to exercise considerable influence onthe company’s Board of Directors as well as its business anddividend policies.

The Emmi Group’s business transactions with affiliatedpersons and companies are based on standard contractualforms and conditions.

In the past, the Emmi Group has repeatedly made bonuspayments to the milk producers, based on the company’s per-formance. The Emmi Group intends to continue to make suchbonus payments in future, to the extent the company’s resultspermit. However, in the Emmi Group’s opinion, there is nolegal claim to such bonus payments.

MIBA Milchverband der Nordwestschweiz and the Zentral-schweizer Milchkäuferverband each have a contractual enti-tlement to appoint a representative to the Board of Directorsof Emmi AG. Although this entitlement has no statutory foun-dation, in the past the representatives selected by the twoshareholders respectively have been elected to the Board ofDirectors. In addition to this, the ZMP has made a written com-mitment to the Zentralschweizer Milchkäuferverband to electa representative of the Zentralschweizer Milchkäuferverband,if the latter’s holding in the company amounts to at least CHF2.5 million.

5. Description of the ownership of capital and the sharesCapital structure and changes during the past three yearsChanges in capital over the past three yearsOn 1 January 2001, the company’s share capital amounted to CHF 31’500’000.–, divided into 315’000 registered shareswith a par value of CHF 100.– each. At the General Meeting of 21 January 2004, the share capital was increased to CHF33’030’000.–, divided into 330’300 registered shares with apar value of CHF 100.– each. At the General Meeting of 19 Au-gust 2004, a par-value split of the existing registered shareswas carried out, reducing the par value from its former CHF100.– to CHF 10.– per registered share. Thus before execution

of the current offer, the share capital amounted to CHF33’030’000.–, divided into 3’303’000 registered shares with apar value of CHF 10.– each.

In addition to this, at the General Meeting of 19 August2004, as a basis for the capital increase within the frameworkof the current offer, an authorized capital was introduced, inaccordance with a new Article 3c in the Articles of Association(see below under «Authorized capital»). Based on this changein the Articles of Association, the Board of Directors decidedon 10 November 2004 to carry out the capital increase by issu-ing a maximum of 1 million registered shares, to be paid upfully in cash, with an issue price of CHF 10.– each. The pre-emp-tive rights of the existing shareholders were excluded. The cor-responding resolution was passed on 3 December 2004.

After the capital increase was carried out on 3 December2004 in connection with the current offer, the company’s cap-ital now amounts to CHF 43’030’000.–, divided into 4’303’000registered shares with a par value of CHF 10.– each.

Conditional capitalAccording to Article 3a of the company’s Articles of Associa-tion, the share capital can increase by a maximum amount ofCHF ten million through the issue of no more than one millionfully paid-up registered shares at a par value of CHF 10.– each,via exercise of conversion and/or option rights granted in con-nection with bonds or similar instruments issued by the com-pany or by one of its subsidiaries. The subscription rights ofshareholders are excluded; the respective holders of conver-sion and/or option rights are entitled to subscribe to the newregistered shares. Where bonds and similar instruments are is-sued to which conversion and/or option rights are attached,the Board of Directors can limit or exclude the shareholders’pre-emptive rights if such bonds and similar instruments areissued to finance or re-finance the acquisition of companies,parts of companies or participations, new investmentsplanned by the company or for the issue of convertible andwarrant bonds on the international capital markets. If the pre-emptive rights are excluded, the bonds shall be issued on mar-ket terms, the conversion rights exercisable for a maximum of10 years and the option rights exercisable for a period of 5years at most from the date on which the bond concerned isissued, and the conversion and/or option price for the newregistered shares must correspond to no less than the marketprice on the date the bond is issued. The new registered sharesare issued at the conditions of the respective convertible orwarrant bond.

The acquisition via exercise of conversion and/or optionrights and any other transfer of new registered shares is sub-ject to the restrictions specified in Art. 6 of the Articles of As-

Friday, 11 March 2005London Bridge, LondonPhoto: Bob Moore, London


sociation. It is planned to use the conditional capital to servicethe conversion rights attached to the 2W % subordinatedbond issued by Emmi AG in 2001, with a condition precedentconversion right, in the amount of CHF 71’430’000.–(2001–2007). With the execution of the placement describedin this prospectus and the accompanying listing of the sharesof Emmi AG on the SXW Swiss Exchange, the condition prece-dent according to the bond’s terms of issue is met, giving riseto the conversion right in accordance with the bond’s terms ofissue. The conversion right can be exercised 6 months afterthe first trading day of the registered shares, i.e. on 6 June2005. The conversion period ends on 20 September 2007,12 noon and the conversion price amounts to CHF 71.43 perregistered share at a par value of CHF 10.– each. With the list-ing of the company’s shares on the SWX Swiss Exchange, therewill also no longer be an above-par repayment in accordancewith the bond’s terms of issue. In line with the bond’s terms ofissue, the company has the right to repay the bond premature-ly if 95 % of the shares are converted (Art. 13.2.6 a) of thebond’s terms of issue) or if the price of the registered share isquoted at more than 150 % of the conversion price on 20 con-secutive trading days (Art. 13.2.6 b) of the bond’s terms of is-sue). Currently, the company does not intend to repay thebond early in accordance with Art. 13.2.6 b) of the bond’s termsof issue and has committed itself vis-à-vis the syndicate banksnot to exercise this repayment opportunity before 6 June2005.

Authorized capitalAccording to Article 3b of the Articles of Association, the Boardof Directors is entitled at any time up to 21 January 2006 toincrease the share capital by a maximum amount of CHF470’000.– through the issue of no more than 47’000 fullypaid-up registered shares at a par value of CHF 10.– each. Theincreases may be underwritten or may be effected in partialamounts. The respective amount of the issue, the date onwhich the shares will rank for dividends and the kind of contri-butions to be accepted shall be determined by the Board ofDirectors. The shareholders’ pre-emptive rights are excluded ifsuch new shares are to be used for the corporate acquisitionsvia share swaps, for the financing or re-financing of the acqui-sition of companies, parts of companies or participations andfor new investments planned by the company. The purchase ofshares out of the capital increase and any other transfer ofnew registered shares is subject to the restrictions specified inArt. 6 of the Articles of Association. According to Article 3c ofthe Articles of Association, the Board of Directors was entitled,for the listing of the company on the SWX or on any other reg-ulated market within the framework of an IPO (Initial PublicOffering), to increase at any time up to 19 August 2006 the

share capital by a maximum amount of CHF 10’000’000.–through the issue of no more than 1’000’000 fully paid-upregistered shares at a par value of CHF 10.– each. The in-creaes could be underwritten or could be effected in partialamounts. The respective amount of the issue, the date onwhich the shares would rank for dividends and the kind ofcontributions to be accepted could be determined by theBoard of Directors. The pre-emptive rights of shareholderscould be excluded if such new registered shares were to beused for the listing of the company on the SWX or on any other regulated market within the framework of an IPO (InitialPublic Offering). The members of the cooperatives of theZentralschweizer Milchproduzenten ZMP in Lucerne, (identi-fication number: CH-100.5.011.111-0) and MIBA Milchverbandder Nordwestschweiz in Liestal (identification number: CH-280.5.910.482-4) have, without financial advantage, a pre-emptive subscription right of a maximum of 20 % of the newly issued shares. The purchase of shares out of the capitalincrease and any other transfer of new registered shares issubject to the restrictions specified in Art. 6 of the Articles ofAssociation.

The sharesThe following is a summary of the most important provisionscontained in the Articles of Association of Emmi AG and Swisslaw, insofar as these provisions affect the share offering ofEmmi AG. This description is not exhaustive, and is providedsubject to Swiss law and the Articles of Association of EmmiAG.

Type of shares and how they are documentedThe shares offered are registered shares with each share hav-ing a par value of CHF 10.–. The shares are fully paid up and arenot subject to any further payment or contribution obliga-tions.

The shares exist only as book entries. Shareholders are notentitled to printed certificates and delivery (suspended print-ing of share certificates). However, you may at any time re-quest Emmi AG to issue a certificate verifying the shares thatyou own.

Voting rightsEach share carries the right to one vote. The voting rights as-sociated with the shares and other rights related to the rightto vote may only be exercised by shareholders who are regis-tered in the share register of the company as having a right tovote (see «Ability to transfer shares and restrictions on regis-tration»).


Ability to transfer shares and restrictions on registrationPursuant to Article 7 of the Articles of Association, sharehold-ers may only transfer uncertificated shares and the uncertifi-cated rights based on same by way of an assignment, and forthe assignment to be effective, notice of same must be givento the company. In addition, uncertificated shares and therights based on same may only be pledged by way of a writtenpledge agreement in favour of the bank where they are held asbook entries.

Pursuant to Art. 6, para. 3 of the Articles of Association,purchasers of registered shares will be registered in the shareregister, upon request, as shareholders or beneficial ownerswith voting rights if they expressly confirm having acquiredthese registered shares in their own name and for their ownaccount.

If a purchaser is not prepared to provide such confirma-tion, the company may refuse registration and the right tovote.

Pursuant to the Articles of Association, after hearing theperson affected, the Board of Directors is also entitled to can-cel, with effect retroactive to the date of registration, any ap-proval and registration in the share register that was gainedbased on false information.

General Meeting of ShareholdersUnder Swiss law, a General Meeting of Shareholders must beheld each year within six months following the end of the fis-cal year of Emmi AG (currently 31 December). General Meet-ings may be convened by the Board of Directors or, if neces-sary, by the statutory auditors. One or more shareholders whojointly represent at least 10 % of the share capital have theright to demand that a General Meeting be convened. In addi-tion, one or more shareholders jointly representing shareswith a nominal value of at least CHF 1 million as well as share-holders who, jointly, represent at least 10 % of the share capi-tal may have an item put on the agenda. Under Art. 10, para. 4of the Articles of Association of the company, such requestsmust be received by the Board of Directors no later than 45days prior to the General Meeting. The General Meeting mustbe called no later than 20 days prior to the date of the meet-ing by notice published in the Swiss Commercial Gazette. Theregistered shareholders listed in the share register may alsobe mailed an invitation to the meeting.

Neither the company’s Articles of Association nor Swisslaw specify a quorum for a General Meeting.

As a rule, resolutions of any General Meeting are made bythe absolute majority of the voting rights represented at theGeneral Meeting (i.e. with a simple majority of the shares rep-resented with any abstentions having the effect of a no vote).

In particular, resolutions at these General Meetings are re-quired for any amendments to the Articles of Association, ap-pointment of the Board of Directors and auditors, approval ofthe annual report and group accounts, setting of any divi-dends, approval of the actions of the Board of Directors andExecutive Management (provided their business activity wasdisclosed to the General Meeting), and appointment of a spe-cial auditor.

Pursuant to Art. 16, para. 2 of the Articles of Association, aresolution of the General Meeting carried with at least two-thirds of the votes represented at the General Meeting andthe absolute majority of the nominal values of the shares rep-resented is required to: (a) amend the purpose of the compa-ny; (b) introduce voting shares; (c) restrict the transferabilityof registered shares; (d) effect an approved or conditional in-crease in capital; (e) effect a capital increase through conver-sion of capital surplus, in return for a contribution in kind orfor the purpose of acquiring property and granting specialrights; (f) restrict or revoke pre-emptive rights; (g) change thelocation of the registered office of the company; (h) dissolvethe company without liquidating it (through a merger, for ex-ample); or (i) amend the provisions of the Articles of Associa-tion relating to the restrictions on registration, as well asamend Art. 16, para. 2 (i) of the Articles of Association.

A shareholder at the General Meeting may only be repre-sented by a legal representative, another person attending theGeneral Meeting who is registered in the share register withvoting rights, a proxy for shares held in safekeeping, an officerof the company or an independent proxy. As a rule, ballots arepublic, unless the Chairman issues instructions for a secretballot or the General Meeting passes a resolution to holdsame.

Balance sheet profit and dividendsThe Swiss Code of Obligations requires that at least 5 % of thebalance sheet profit be allocated to the general reserves until these reserves represent 20 % of the paid up share capital ofthe company. Any balance sheet profit remaining is availablefor distribution by the General Meeting , subject to legal pro-visions relating to same.

Under Swiss law, dividends may only be paid out if a com-pany has a sufficiently high balance sheet profit or if the re-serves of the company created for this purpose are sufficientfor distribution of a dividend.

In all cases, dividend distributions require a resolution ofthe General Meeting. The Board of Directors may recommenddistribution of a dividend, but cannot resolve to distribute anydividends. A resolution to distribute dividends is only valid if


the auditors confirm that the dividend recommended by theBoard of Directors is in accordance with the law and the Arti-cles of Association. In practice, the General Meeting normallyaccepts dividend recommendations by the Board of Directors.Dividends are normally due immediately following the resolu-tion of the General Meeting as to the distribution of profit.Under Swiss law, the limitation period for dividend paymentsis five years after the end of the year in which the dividendpayment is due.

Pre-emptive rightsUnder Swiss law, any share offering requires prior ratificationor authorization by the General Meeting, irrespective ofwhether the offering is made for consideration (through cashor another form of payment) or for no consideration. Whennew shares are offered, shareholders of a Swiss company havea pre-emptive right equal to their existing holding.

However, pre-emptive rights can, for reasons of exigency,be restricted or cancelled based on a resolution of the Gener-al Meeting which must be passed by two-thirds of the votingshares represented at the meeting and the absolute majorityof the par value of the shares represented. The pre-emptiveright for this offering was withdrawn.

Authority to raise external financingNeither Swiss company law nor the Articles of Association ofEmmi AG restrict the authority of Emmi AG to raise external fi-nancing. As a rule, any decision to raise external financing ismade by the Group Management of the company; no resolu-tion of the General Meeting is required for this.

Conflicts of interestUnder Swiss company law, there is no general provision fordealing with conflicts of interest. The Swiss Code of Obliga-tions, however, requires that members of a Board of Directorsand Executive Management safeguard the interests of thecompany and in this regard, imposes upon them duties of duediligence and loyalty. This is generally understood to meanthat members of a Board of Directors and Executive Manage-ment must abstain from voting on any decisions that directlyaffect them. Members of the Board of Directors and ExecutiveManagement are personally liable to the company for anybreach of these provisions. In addition, Swiss law contains aprovision pursuant to which unjustified dividends and othersimilar payments to a shareholder, member of a Board of Di-rectors or any persons closely associated with a companymust be paid back if the recipient of the payment receivedsame in bad faith.

Own sharesUnder Swiss law, a company has only limited options to buyback or hold its own shares. The company and its subsidiariesmay only buy back shares if the company has freely disposableequity capital in the amount required for this, and the totalpar value of these shares does not exceed 10 % of the sharecapital of the company. In addition, the company, on its bal-ance sheet, must create a special reserve in the amount of thepurchase price of the shares acquired. Any such shares thatare held by the company or one of its subsidiaries do not con-fer any voting rights at General Meetings, but do bestow allpecuniary rights that are generally attached to shares of acompany.

As of 31 December 2004, the Emmi Group held neithershares nor bonds of Emmi AG. Since the Friends & Family pro-gramme will be carried out by the company, there is the possi-bility that the company may have to accept own shares for itsaccount if the beneficiaries under the Friends & Family pro-gramme fail to meet the obligations entered into to buy theshares allocated to them.

Duration, liquidation, merger and demergerThe duration of Emmi AG is unlimited. Emmi AG may bewound up at any time by resolution of a General Meeting. Anysuch resolution must be passed by (1) an absolute majority ofthe voting shares represented at the meeting if the companyis wound up by way of liquidation, or (2) a two-thirds majorityof the voting shares represented at the meeting and the ab-solute majority of the par value of the shares represented inall other cases (such as the case of a merger or demerger). Fur-thermore, a winding up based on a court decision is possible,in particular (1) if the company falls into bankruptcy or (2) ifshareholders holding at least 10 % of the share capital requestthis based on cogent reasons.

Under Swiss law, any surplus resulting from a liquidation,after satisfaction of the claims of all creditors, shall be paidout to shareholders in proportion to the paid in par value ofthe shares they hold.

Disclosure of major holdingsUnder the relevant provisions of the Swiss Stock Exchange Act,in effect since 1 January 1998, shareholders and shareholdergroups acting in joint agreement or as an organized groupthat reach, exceed or fall below the thresholds of 5 %, 10 %,20 %, 33B/d %, 50 % or 66C/d % of the voting rights of a companylisted on a Swiss stock exchange must notify the company and

Friday, 11 March 2005Brandenburg Gate, BerlinPhoto: Michael Miroe Röthig, Berlin

the SWX Swiss Exchange about all holdings, the identity ofindividual members, the type of agreement and proxy votes,irrespective of whether the particular voting rights may be ex-ercised or not. Upon receipt of such notification, the companymust inform the public.

Obligatory offerUnder Swiss stock exchange law, shareholders and sharehold-er groups acting in joint agreement that acquire in excess of33B/d % of the voting rights of Emmi AG must submit a take-over offer to the other shareholders. Under certain circum-stances, there may be an exception to the obligatory offer, inparticular if another shareholder has a higher percentage ofvoting rights than the acquirer. Exceptions to the obligatoryoffering are allowed by the Swiss Takeover Commission orSwiss Banking Commission. Emmi AG is currently unaware ofany exceptions. If no exception is allowed, the obligatory offer-ing must proceed in accordance with the rules of procedureand in compliance with the pertinent provisions with respectto determination of price that are contained in the Swiss StockExchange Act and related implementation ordinances.

Notice and publication requirementsThe company’s official publication medium is the Swiss Com-mercial Gazette. Announcements by the company are made inthe official publication medium, notices to registered share-holders by letter to their last address entered in the share reg-ister or, unless the law dictates otherwise, by publication inthe official publication medium.

Notices which, according to the listing regulations of theSWX Swiss Exchange, must be provided in German and French,will be published in these languages in two Swiss newspa-pers. Emmi AG and the SWX Swiss Exchange may also dissem-inate information by way of electronic stock exchange infor-mation systems.

6. Distribution of profits and dividend policiesThe shares offered are entitled to a full dividend for the year2004.


Under Swiss law, a company may pay dividends if there aresufficient funds available for distribution. 5 % of the net profitfor the year must be allocated to the general reserves untilthese reserves reach 20 % of the paid up share capital of thecompany. The general reserves of Emmi AG currently exceedthis threshold. If there is a distribution of greater than 5 % ofthe nominal capital, a further amount of 10 % of the excessportion must be paid to the general reserves.

A dividend distribution is recommended by the Board ofDirectors and requires the approval of the shareholders of thecompany in a General Meeting. In addition, the statutory audi-tors must confirm that the recommendation by the Board ofDirectors of a dividend is in compliance with Swiss law andthe Articles of Association. The Board of Directors assumesthat the General Meeting of the company that approves divi-dends for the year in question will take place within the first6 months of the following fiscal year. Approved dividends willthen be paid out immediately thereafter.

Dividend payments depend, among other factors, on thecurrent dividend policy of the company, its income, its finan-cial situation, market conditions, the general economic cli-mate, the required financial resources, business prospects andregulatory or other legal considerations. Even though thecompany expects that shareholders can be paid dividendseach year, neither the payment of a dividend nor the amountof same can be guaranteed. It is the goal of the company, inthe medium term, to pay an annual dividend of 25–30 %.

Dividend payments are subject to Swiss withholding tax.Dividend payments and other distributions made by Swisscompanies to certain persons or organizations are subject torestrictions under Swiss law in connection with sanctionsagainst such countries as Iraq, Yugoslavia, Zimbabwe, such or-ganizations as Al-Qaida or such persons as Osama bin Laden.

Profit per registered share for the last five yearsDuring the last 5 years, Emmi AG reported the following divi-dends and net annual profit for each registered share with apar value of CHF 10.–:

7. Information PolicyThe company provides current and potential investors withextensive information about the company, its strategy andbusiness development. The aim is to provide timely, instanta-neous and transparent information about important compa-ny developments. The Emmi Group publishes an income state-ment and balance sheet every six months. At the GeneralMeeting, shareholders are provided information through thehalf-year report and if required, additional information aboutbusiness activity.

8. Auditors8.1 Duration of mandateAuditorsPricewaterhouseCoopers, Werftestrasse 3, P.O. Box, 6002 Lu-cerne have been the statutory auditors and group auditors forEmmi AG since its incorporation. At the General Meeting on 16June 2004, PricewaterhouseCoopers, Lucerne, was reappoint-ed auditor of the company for a further period of one year.

8.2 Audit feesTo complete its mandate as statutory auditors for the 2004 re-porting year, the auditors charged total fees of CHF 589’000.–.

8.3 Additional feesDuring the 2004 reporting year, PricewaterhouseCoopers AGcharged a total of CHF 964’000.– for additional services be-yond the scope of their statutory mandate.

8.4 Auditor supervision and control mechanisms in respect of the auditorsThe Board of Directors Controlling assesses the performance,invoicing and independence of the external auditors and pro-vides the Board of Directors with corresponding recommenda-tions. The auditors provide the Group Management and Con-trolling with regular reports that set out the results of theirwork and recommendations.

(The above figures were adjusted to the par value split of registered shares,decided by the General Meeting on 19 August 2004, from an existing parvalue of CHF 100.– to CHF 10.– per registered share.)

Friday, 11 March 2005Oberstufenzentrum Gottstatt, Biel-BiennePhoto: Andreas Messerli, Birmensdorf

In CHF Financial statements2004 2003 2002 2001

Net profit 14 13 6 9Dividend payment 1.60 1 1.30 1.10 1.10

1 Proposal to the General Meeting ofShareholders


Emmi’s claim is to produce consistent top-quality perform-ance, and meeting this challenge means remaining activelyinvolved with the corporate culture as it manifests itself with-in the company. The company aims to foster a culture charac-terized by openness and trust, and leadership values that en-able employees to take on responsibility for solving problemsin their own way. Flexibility and commitment are two addi-tional values that are close to Emmi’s heart, operating as itdoes in an environment that is changing rapidly and demandsa relentless commitment to innovation.

Emmi, the milk-processor with its roots in central Switzer-land, is today an attractive employer with locations both inSwitzerland and abroad and a wide range of professionaltraining opportunities on offer. In addition to professionalqualifications, Emmi also attaches great importance to socialskills, with staff development measures aimed at ensuringemployees are fit for current and future challenges. A specificrange of courses has been developed over the last two years,focussing on leadership and project management in responseto the rapidly changing market in which Emmi is active. Notonly does the company wish to prepare for future changes inits environment, it also aims to help shape these changes withinnovations of its own.

Playing in the Premier LeagueThe merger of the acquired fondue companies Zingg AG,Gerberkäse AG and Tiger Käse AG to form Emmi Fondue AG on1 January 2004 and the integration of the Basel dairy into theBerne-Ostermundigen dairy also posed a challenge for the HRdepartment, with locations being amalgamated and new em-ployees integrated in the Emmi Group. Emmi also took overthe production facility Hirzel from Nestlé Schweiz AG in mid-

2004, with the HR department ensuring the smooth integra-tion of the new staff into the Emmi Group. In fact, overall, atotal of 430 new employees joined the Emmi Group in 2004.The integration process also involved the revision or harmoniza-tion of conditions of employment and company regulations.

What does it take to secure success in the internationalarena? This was the central question at Emmi’s annual springemployee event this year. Around 1’200 attendees enjoyed atalk by guest speaker Christian Gross, Coach of Swiss footballchampions FC Basel, who gave an impressive account of whatit means to play in the Champions League. Walter Huber, CEOof Emmi, went on to draw parallels with the Emmi Group,whose aim is to grow in Europe and establish itself in the re-gion’s «Premier League» with innovative, top-quality prod-ucts.

Stronger corporate cohesionThis year, Emmi will focus on strengthening its corporate cul-ture. The Emmi Group has grown rapidly in recent years, withits headcount doubling over the last five years. Once the inte-gration process is complete, the aim this year will be to con-centrate on clearly defining and communicating the valuesthat make Emmi the company it is. In addition, a Group-wideemployee satisfaction survey will be carried out, new workingtime models developed and the processes for managing em-ployee absences optimized.

Emmi is convinced that well-trained and motivated em-ployees are vital to the enduring success of a company, and isworking actively to prepare for a future that will undoubtedlybring intensified competition at the international level.

Fit for the future

Emmi has doubled its headcount over the last five years.In response to this development, HR activities in 2004focussed on integrating new employees and communicat-ing and reinforcing the values that Emmi represents.

Friday, 11 March 2005Milan Cathedral, Milan

Photo: Goran Potkonjak, Zurich

Sum

mar

y

Headcount

2521

2003 2004

2786

0

500

250

1000

750

1500

1250

2000

1750

2500

2250

3000

2750

• In 2004, over 400 new employees joined the EmmiGroup

• Emmi trains over 60 young people a year in tendifferent professions

Employees 43


Emmi’s environmental policy forms an integral part of thecompany’s strategy, with guidelines requiring ecologicallyaware corporate management and an environmentally con-scious approach to all activities. The guidelines are based oninternationally recognized standards such as ISO 14001, andaim to ensure sustainable management of all natural re-sources. With this in mind, Emmi is implementing a widerange of measures, along the entire value chain, to ensurecompliance with the principles of ecological awareness andaction.

Guided by the market and the environmentIn structuring its product offering, Emmi not only focuses onmarket requirements but also takes ecological criteria into ac-count, with ecological considerations playing a significant rolein the product development process, primarily in the areas ofpackaging and the selection of organic raw materials.

Ecological purchasing strategies are pursued in the pro-curement process with, for example, the plastic left over fromthe production of coffee cream containers being recycled.

No genetically modified materialA fact particularly worthy of note, is that Emmi does not useany processes that use genetic engineering to manufactureits products. The company uses neither raw materials nor in-termediate products, ingredients, additives or auxiliary sub-

stances that have been genetically modified or produced fromgenetically modified plants or micro-organisms. Emmi also re-quires its suppliers to adhere to the guidelines on geneticallymodified organisms (GMOs). On the production side, the or-ganic sector deserves mention as well as Emmi is one of thelargest manufacturers of organic products in Switzerland, andaims to expand this sector even further.

Naturally, with a manufacturer of products that are sold ei-ther fresh or chilled, distribution is a central issue. For short tomedium-range distances, transport is via HGV or delivery van,and long distances are covered by sea. Here Emmi uses a fleetof vehicles that satisfy environmental criteria, and is continu-ously optimizing its production and storage network in orderto structure a seamless cool chain that operates with maxi-mum efficiency, for example.

Emmi is committed to ensuring that the employees are in-formed about the ecological aspects of production and distri-bution and maintain and enlarge this knowledge. Employeesare also called upon to do whatever they can to reduce the en-vironmental impact of their actions.

Emmi’s environmental management is controlled central-ly but implemented on a decentralized basis. It pursues envi-ronmental objectives that are monitored on an ongoing basis.

Environmentally conscious corporate management

Emmi is committed to sustainable management of naturalresources at every stage in the value chain, from develop-ment through procurement and production to product dis-tribution.

Aloe Vera. Aloe, the lily of the desert, contains moisture and lotsof vitamins and minerals. Aloe Vera Sensitive yoghurt and Sensitivedrink – the key to pleasure and wellbeing.

Inno

vati

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Sum

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Ecology 45

ISO certification throughoutAt Group level, Emmi achieved ISO 14001 certification in mostof its production facilities in 2004.

Emmi’s environmental impact is greatest in relation to wa-ter, energy, waste heat, waste and traffic, which is why thefirm initiated the following operational measures in 2004: inthe area of logistics, Emmi renewed its vehicle fleet and thusimproved CO2 and particle emissions. Production facilities andwarehouses were amalgamated in order to reduce distan-ces. In energy consumption, Emmi is shifting increasingly togas and making use of waste heat (e. g. frozen warehouse inOstermundigen). Water consumption has also been opti-mized, an example of this is shown at the Ostermundigen site,where the volume of water discharged into the waste watertreatment plant is continually being reduced. In Kirchberg,new package-washing equipment has facilitated an improve-ment in energy efficiency.

A sustainability study by INrate published at the end of2004, was particularly positive about Emmi’s top-to-bottomISO certification, its well-defined environmental managementas well as its verification of the ecological behaviour of its sup-pliers.

Expansion of organic product rangeEven with such a successful history in organic production,Emmi aims to expand its progress even further. Following itstakeover of the Biedermann dairy in March 2005, Emmi hasconsiderably strengthened its position in this area. Bieder-mann, which is based in Bischofszell (Canton of Thurgau), isknown throughout Switzerland as a producer of high-qualityorganic products and will now be managed within the EmmiGroup as the centre of competence for organic products.

This year, we will continue in the same vein, focusing on re-ducing energy and water consumption and CO2 emissions.

Electricity consumptionin kWh

2003 20040

20’000’000

40’000’000

60’000’000

80’000’000

100’000’000

86’646’403 85’340’068

Water consumptionin m3

2003 20040

500’000

1’000’000

1’500’000

2’000’000

2’500’000

2’365’031 2’432’559

Waste to incineration plantin kg

2003 20040

500’000

1’000’000

1’500’000

2’000’000

2’500’000

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2’684’519 2’511’833


For a milk-processor such as Emmi, the development of newproducts and the enhancement of existing ones, as well as theongoing optimization of production processes are vital to suc-cess. Not only when it comes to staying one step ahead of therest in the field of milk products, but also in order to secureearnings power over the long term. Innovation, then, is solidlyanchored in the Group's corporate culture.

Success comes from innovativeness, speed and marketproximityAt Emmi, employees involved with product development haveconsiderable freedom. The principle is one of trial and error,with the focus always on the potential benefit for the end-consumer. As Research and Development (R&D) reports di-rectly to Group Management, the decision-making paths areshort, making it possible to react quickly and act flexibly. R&Dprojects are organized decentrally: the Emmi Group containssix interdisciplinary development teams made up of food en-gineers, dairy specialists, bakers, confectioners, nutritionists,

microbiologists and packaging engineers and designers, whomeet on a regular basis. Marketing, Production and QualityAssurance is also involved in the innovation process becauseultimately, both market proximity and suitability for massproduction are indispensable for the launch of a product onthe market.

Global knowledge networkIn the innovation process, Emmi relies on both internal and ex-ternal know-how. The company has a long history of collabo-ration with universities (the Federal Institute of Technology[ETH] in Zurich, the Commission for Technology and Innova-tion of the Swiss Federal Office for Environment, Forestry andAgriculture [Buwal] in Berne, the Swiss Agricultural College inZollikon and research institutes (Agroscope Liebefeld in Posieux,the Technical University in Munich) as well as cooperationwith strategic partners (Valio and Raisio in Finland, Angel Techin the UK, Tetra Pak in Switzerland, Morinaga in Japan), majorclients and suppliers. This ensures that Emmi is always abreast

Turning ideas into marketable products

Emmi is the innovation leader when it comes to milk prod-ucts. Customer proximity, a corporate culture that enablesrapid reactions and a network of specialists who come froma wide range of areas and provide a constant flow of newideas are the basis of the company’s innovative power.

External know-howUniversities

ETHKTI 1

SHL2

Research institutes

ALP 3

TU 4 Munich

Strategic partners

Valio, FinnlandRaisio, Finnland

Tetra PakMorinaga, JapanAngel Tech, UK

Lead clients

Internal know-how

Group Management

Product release processmanagement

Coordination unit

Coordination between individual development

departments

Comments:1 Commission for Technology and

Innovation2 Swiss Agricultural Colleges /

Zollikofen3 Agroscope Liebefeld / Posieux4 TU = Technical university

▼

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Research & Development

Friday, 11 March 2005Oberstufenzentrum Gottstatt, Biel-Bienne

Photo: Andreas Messerli, Birmensdorf

of the latest developments. At the same time, a productive in-teraction between all these different parties is vital to the in-novation process. In an environment of teamwork, in whichdedicated specialists from a wide range of disciplines providea constant flow of ideas, innovative concepts are born andnurtured. To enable these ideas to come to fruition, Emmi pro-vides both the technical infrastructure and the necessary in-vestments.

Caffè Latte: Emmi’s most successful launchLast year's launch of the milk-drink Caffè Latte demonstratedhow short the path from idea to marketable product can bewith Emmi. The drink was developed and launched in 2004and was so well-received that it is now the most successfulnew product in Emmi’s history. The market success continuedto pose a challenge for R&D even after the launch, as it wasnecessary to ensure that the rapidly increasing demand couldbe met and that the level of quality could be maintained de-spite the dramatic increase in production volume. Parallel tothis, the R&D division expanded the yoghurt range last year.Emmi employed a total of around 50 members of staff in R&Din 2004, and the Group spent approximately CHF 15 –20 m onresearch and development projects.

Expansion of premium and lifestyle product rangesCurrent market trends are towards wellness products andfunctional food. At the same time, there is also an emphasison the pleasure component. In short, food with additionalhealth benefits and high-quality products are currently in de-mand, and Emmi is certainly on the right track with itslifestyle and premium products. Two new products have al-ready been launched in the first quarter of 2005 : the premiumline Création Yogourt and the lifestyle drink Choco Latte. Evo-lus, a product that has a positive influence on blood pressure,has already been launched in Portugal and is about to be mar-keted in Switzerland.

Emmi is the innovation leader when it comes to milk prod-ucts, and is focusing its efforts on continuing to offer con-sumers new and innovative products in the future.

BaselPhoto: Guido Flück, Los Angeles

Further Emmi locations

Production of fresh productsHirzel

Production of cheese Bever, Landquart, Saignelégier, Sarnen,Bürglen, Stein, various village cheeseries

MaturationGossau, Landquart, Langenthal,Lützelflüh, Moudon, St. Imier, Thun,Burgdorf, Zollikofen

PackagingUtzenstorf, Nüziders (Austria)

Distribution of cheese specialitiesZollikofen

Supply of dairy products to catering tradeZurich

Frozen warehouse Kriens

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Emmi International

1 USAEmmi (USA), Inc., Valley Cottage, USA-NY 10989

2 FranceEmmi France S.A.S., F-01320 Chalamont

3 GermanyEmmi Deutschland GmbH, D-45127 Essen Emmi Käse Deutschland GmbH, D-77731 Willstätt-Sand

4 AustriaEmmi Österreich GmbH, A-6714 Nüziders

5 ItalyEmmi Italia S.r.l., I-20123 MilanTigre Italia S.p.A., I-16158 Genoa

6 BeneluxCraamer & Co. B.V., NL-4004 JJ Tiel

7 UKEmmi UK Ltd., UK-TW9 1PL Richmond, Surrey

Emmi Switzerland1 Emmi headquarters, Lucerne

Central Services, Marketing etc.

2 Emmi LucerneProduction of dairy products

3 Emmi EmmenProduction of fresh products Development, production and pre-packaging of cheese

4 Emmi OstermundigenProduction of fresh products and ice-cream

5 Emmi KirchbergMaturation and packaging of various hard andsemi-hard cheesesExport cheeses

6 Emmi KaltbachProduction of cheese specialitiesKALTBACH cheese-ageing cave

7 Emmi DagmersellenProduction of powdered milk, mozzarellaSales to industry

8 Emmi KüssnachtSupplies to retail and catering trade

9 Emmi LangnauProduction of processed cheese and fondue

10 Emmi ThunProduction of processed cheese and fondue

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dos

e of

sta

nol (

2g).

Stan

ols

are

plan

t-ba

sed

subs

tanc

es w

ith

a si

mi-

lar s

truc

ture

to c

hole

ster

ol.

Pfän

nli-C

häs

(frie

d/gr

illed

che

ese)

The

mea

tal

tern

ativ

e th

atis

sim

ple

to p

repa

re in

the

fryi

ng p

an o

r on

the

grill

– so

ld in

pra

ctic

al re

seal

able

pac

kagi

ng –

cate

rs to

the

incr

easi

ng tr

end

tow

ards

con

veni

ence

pro

duct

s.

Aloe

Ver

aAl

oe V

era

stan

ds fo

r ene

rgy,

vita

lity,

wel

lnes

s and

ple

asur

e.Al

oe v

era

is th

equ

een

of m

edic

inal

pla

nts a

nd h

as b

een

cons

ider

ed a

sym

bol o

f im

mor

tal-

ity

by t

he C

hine

se f

or c

entu

ries.

Wit

h it

s Al

oe V

era

drin

k an

d yo

ghur

t,Em

mi h

as m

anag

ed to

suc

cess

fully

com

bine

ple

asur

e an

d w

elln

ess

Ger

ber F

ondu

e O

rigin

alTh

is c

lass

ic is

the

syno

nym

for f

ondu

e –

the

unm

ista

keab

le o

rigin

al a

nd a

uniq

ue p

eren

nial

hit

.

Akti

fitAk

tifit

initi

ated

the

tren

d to

war

ds a

«da

ily p

ortio

n of

hea

lth»

– ev

ery

bott

leof

Akt

ifit

wit

h LG

Gco

ntai

ns a

dai

ly r

ecom

men

ded

dose

of

folic

aci

d an

dLG

G.

Impressum

EditorStephan WehrleAlexandra KarpfManuela Sticher(Emmi Group Communication, Lucerne)

Graphic, Layoutwww.hellermeier.ch, Emmenbrücke

Lithography, Printbeagdruck, Emmenbrücke

The Emmi Group Annual Report is alsopublished in English and French. Originallanguage German. The Financial Reportfor 2004 is available in German and English.Both reports can be ordered [email protected]

Emmi GroupHabsburgerstrasse 12CH-6002 LucerneSwitzerlandTelephone + 41 41 227 27 27Fax + 41 41 227 27 [email protected]

Annual report 2004 - Emmi UK · 2 Annual report 2004 Dear Business Partner, ... example, we were...

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